Volvo details exit from Polestar – will divest 62.7% of its shares to investors, maintain 18% stake

It’s never a good look when your own parent is looking to disown you to save your skin, but that’s exactly what’s happening to Polestar. The electric vehicle specialist will cease to receive funding from Volvo, which will hand its responsibility for the firm back to its own parent Geely.

As part of the move, Gothenburg will be divesting at least some of its 48% stake in Polestar. It’s proposing to distribute 62.7% of its shares – said to be worth a total of SEK9.5 billion (RM4.4 billion) – to its shareholders, retaining a 18% stake and ensuring it retain some form of influence on the company.

This is despite Geely taking over operational and financial responsibilities for Polestar. Volvo will continue to collaborate with Polestar on R&D, manufacturing, after sales and commercial activities; the latter also still has an outstanding US$1 billion (RM4.8 billion) convertible loan.

Formerly a Volvo-affiliated racing team, Polestar has gone through many phases since it was bought over in 2015 – first as its performance sub-brand, then spun off as a separate EV-focused outfit. The company has churned out four models – the Polestar 1 hybrid sports coupé, 2 sedan and 3 and 4 SUVs – and is in the midst of developing a fifth based on the stunning Precept concept.

But it’s been in dire straits as of late, struggling to ramp up production and cut prices to match stiff competition from the likes of Tesla and BYD. This is reflected in the brand’s sales last year – it cut its initial target from 80,000 to 60,000 units, yet still failed to meet it, selling just 54,600 cars globally.

Just last month, Polestar rang alarm bells when it announced it was cutting around 450 jobs, or 15% or its workforce. It’s not alone – Volvo itself had to trim its workforce by a staggering 1,500 last year, making this move to cut Polestar off somewhat of a necessity.

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